When asked, most people will say that they live on a budget, but the truth is that very few people truly do. They might have a vague idea where most of their money is going, but they don’t operate on a zero-based budget. Much like their annual goal setting or new year’s resolutions, their budget is a good “idea” instead of a detailed, written plan of action.
You may have stumbled across this blog post looking for strategies on how to flip real estate for quick cash, and if so, we have PLENTY of content throughout the website on how to do just that. However, I BEG OF YOU, don’t leave this page before you get to the end of the article. This will be the most important thing that you learn today to ensure your business gets off the ground and is successful!
In a zero-based budget, every dollar that comes in and every dollar that goes out is accounted for and assigned a category. It’s an extremely empowering feeling when you take control of your money and say, “This is where you are going!” In contrast, most people get to the end of the money and say, “Where did it all go?”
For example, people who don’t live on a budget have a completely different definition of “saving” money. They may find a $300 suit on sale for $200, and then brag about their shopping conquest by telling their friends that they “saved” $100 on the suit. But if you were to ask them where the $100 is that they saved, they have no idea! It’s because the money was just spent somewhere else. Why? Because their money is not intentionally assigned at the beginning of the month!
A person who lives on a zero-based budget would have known EXACTLY where the $100 was, because they had to re-assign it somewhere. If you had a $300 in your clothing category because you knew you needed a new suit that month, and you found that suit for only $200, it would leave you with $100 that was not assigned. You could leave it in the clothing category for additional clothing needs, move it to the entertainment category for a night out with friends, OR you could move it to your “launch new investing business” category to purchase bandit signs, business cards, or purchase a few shares of your favorite REIT.
ACTION STEP – Don’t be just a reader…be a doer! Go grab an online budgeting tool and make your zero-based budget today.
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Want to read more about the important of a budget for your investing business? Check out this post, “A Personal Budget is Critical to Your Business Success.”